September 17, 2014

What Happened to LoopNet?

loopnetHave you ever read the history of LoopNet on Wikipedia?  Did you know that its core business principles are and always have been “connecting sellers with buyers over an open and free (emphasis is mine) network.”

There’s more.  A glowing case study of LoopNet’s startup model states that LoopNet’s founder envisioned a partnership of brokers that would consolidate the fractured CRE data market.  This “partnership” became a reality thanks to the founder’s persistence in leveraging and nurturing a relationship with the commercial brokerage community.  As a result, LoopNet is a model for how collaboration and cooperation can create a successful user generated data site.

Wow.  What happened to LoopNet?  The free is obviously gone.  And open?  It’s open if you pay, I suppose. But if you want to get your data out to use anywhere except your own website, you’re out of luck.  And let’s not even talk about their terms of use that take your data and photos as their own.

The cooperation/collaboration with brokerages?  It may have started out that way but then things changed.  Someone had to pay for all that data aggregation and agents shouldn’t expect to get the benefits of that for nothing.  It wouldn’t be so bad to pay a submission fee if search were free at least.  But LoopNet wanted to hit up those buyers too.  Somehow residential aggregators can make money without charging for search.  Either LoopNet couldn’t or didn’t try.

If only LoopNet could have figured out how to make money without biting the hands that fed them.  Or at least come up with something fairer.  Like these new sites that get paid for performance.  If you put your listing on one and you get a deal out of it, the site gets a cut of the commission.  Or even a pay per click model like some of the residential aggregators use.  The agent pays only when their listing is viewed.  But those options would have been messier than a subscription model where you have a steady flow of income no matter how good/bad the market is.

The worst part of the whole story is that LoopNet could have really become a force in CRE if it had truly partnered with brokers.  What if they had offered a small share of the business to their agent partners and charged an annual participation fee?  What if LoopNet had worked with brokers to come up with standardized data formats and easy data exchange?  What if LoopNet had thought to do what CompStak is doing – before they did.  Yeah, they had those crowd sourced properties, but if they had asked their partners agents, they would have found out that comps were more valuable.

All these missed opportunities.  Their original vision – just a bunch of words.  And now CoStar owns them.  Some people made out really well – but it wasn’t any of their partners in the brokerage community.

Comments

  1. Funny you should mention Loopnet should’ve recognized the opportunity to crowd source comps. They do actually prompt for the sale price on listings which get classified as sold when you inactive the listing on Loopnet.

    The problem was, there is no “hook” for brokers to provide this information, other than out of the good of their heart. If they did issue comp credits for this type of information to brokers, I bet a lot more would be willing to provide such information….

    • It could work, especially if they don’t hand out the credit until they verify the info…and they don’t try to make it too difficult for the agent to get credit. Wouldn’t that be something – getting paid to provide data…

  2. “Somehow residential aggregators can make money without charging for search.”

    Can you name a residential aggregator that makes money?

  3. Zillow became profitable in 2011; Trulia in 2010. Granted, it took each about 6 years to get there, but LoopNet went from free to paid after about 6 years and was profitable about 2 years later (2003).

    • Trulia is not profitable, and Zillow is only marginally so.

      Plus those do not compare to LoopNet in terms of integrity and quality of the data (verifiability, standardized sources, timeliness, etc…). It’s not an appropriate comparison.

      The models are different. LoopNet must undertake greater cost to achieve the data integrity.

      • They’re all supposed to be marketing platforms…just ask the FTC about LoopNet. How does it make any sense to charge someone to view ads, which is essentially what listings are? As a marketing platform, it makes no sense to charge the user…but it does make sense to charge the agents for marketing services.

        But since we all know LoopNet is really a data provider, what you seem to be saying is that data aggregation can’t be profitable without a subscription model. Fair enough.

        As to LoopNet’s greater cost to achieve data integrity, that laughing you hear is from agents who strongly disagree. LoopNet just takes what the agents give them, though I do know they do a little data massaging on large imports to get categories right/consolidate lease listings.

        • LoopNet is an online marketplace (listing service). Z and TRLA are not. The models are not comparable.

          My use of the word ‘achieve’ to describe LoopNet’s data integrity was probably a stretch. I am not saying their data integrity is good. I’m just saying the resources they dedicate to that end make the data infinitely more relevant/useful versus Z or TRLA. But yeah, it is still not very good. (which further speaks to how awful the data integrity is at Z/TRLA)

          • Chris Clark says:

            I disagree that LoopNet isn’t comparable to Zillow or Trulia. They’re all listing aggregators/just repackage data. Their models are different as to how they monetize, LoopNet using a subscription model and Zillow/Truila through PPC, value added services, ads or partnerships. But in both cases, the reason agents use aggregators is for leads/a way to market their listings.

  4. Data aggregators that compete for MLS data to create market analysis tools may be paying for that data or getting it through partnerships with MLS subscribers-but using it, or restricting it, in ways the MLSs never intended, according to Marty Frame, president of the Realtors Property the NAR-owned company that’s aggregating data on every parcel of property in the United States tocreate a free market analysis tool for REALTORS.Some of the agreements that keep MLSs are signingwith the data aggregators, for example, prohibit Them from making the data available to otheraggregators, including RPR.

  5. “The worst part of the whole story is that LoopNet could have really become a force in CRE”

    Are you saying it is not? I sold 25 properties last year(~$40mm) and 80% of my “ups” came from Loopnet. And if I take a listing that isn’t viewable on Loopnet as Premium, I may as well drop the listing agreement in the shredder.

    • A force as in moving the industry forward technology wise. But it’s a good lead generation site for some types of properties and in certain markets.

      • I see. I’ve read your stuff for a while, and never posted until today – so I certainly understand and agree with most of your points. I dislike my Loopnet bill amount, but see no other alternative for my market. CIE’s just dont’ work.

        • Chris Clark says:

          Thanks for reading…and glad you commented. It gave me an idea for my next post…

          Yes…CIEs are for data/B2B “marketing” – their associated “free” search sites don’t get much traffic so no leads from those.

  6. Tim – What market are you in? I agree that LoopNet has more influence and effectiveness in certain markets.

    • I am in Northeast Florida.

      I’ve sold Industrial, Flex, Office, Retail, and development land via Loopnet in the last 2 years – I don’t do a lot of leasing anymore, but I can say I’ve leased industrial, flex, and office.

      It is easily the top marketing outlet in Florida.

      • Chris Clark says:

        I’ve heard that LoopNet is not good for leasing in general – people search locally for that. Sales, especially investment properties, are what agents tell me LoopNet is good for. Do you have any idea how many of your leads came from paid subscribers – agents or buyers – and how many were from free subscribers?

  7. Loopnet for CRE is what Zillow/Trulia are for residential brokers. Both industries complain about these respective “data” providers and their data, however both continue to use them because everyone else is using them. With almost 87% of the CRE industry on Loopnet, they’re a “force” by default…not really by innovation/moving industry forward unfortunately.

    This herd mentality is a challenge #1 to innovative startups offering an alternative. As I recall, it was Einstein who said, “The definition of insanity is to keep doing the same thing over and over again and expect a different outcome.” But, then again, not everyone is Einstein. ;-)

    • Chris Clark says:

      Well said. Re the herd mentality, there’s also “intermittent” reinforcement at play. An agent may have gotten one big deal out of LoopNet 5 years ago and still hangs on waiting for the next one… Then again, one big deal makes it all worthwhile.

  8. Loopnet is more interested in that band called Train per their Twitter feed…

  9. Missed those tweets….or maybe they made them disappear…..

  10. I read this post just after reading your post on SpaceList in Canada. I am still befuddled as to why NAR cannot come up with a solution for CRE similar to the residential listing service. They try with shoddy solutions that don’t cut it, which then turn out to be partnerships with other CIE’s that are lacking.

    The residential solution is quite robust, but CRE gets little in return. Actually, I wonder what we do get in return for our dues, but I digress.

    It was told almost 3 years ago I was told by NAR we would have a solution, and here we wait still talking about the shortfalls of LoopNet and how we hate it and it’s price tag. I don’t see it as a insurmountable issue- but NAR seems to find ways to ignore the issue….

    • Gary! Back on the blog circuit! Yeah, I remember that big NAR push that went nowhere. They couldn’t get anyone to pay. I mean, how many of these things can y ou pay for? But CRE isn’t real fond of NAR anyway so not sure if it was ever going to work…

      Good to hear from you. Onward, upward, forward!